U.S. automakers are returning to Congress for high-stakes hearings they hope will persuade skeptical lawmakers to save their troubled industry with $34 billion in emergency aid, but a top Senate Democrat wants to hand their problem to the Federal Reserve.
Two weeks after a botched attempt on Capitol Hill, repentant leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC were appealing to the Senate Banking Committee on Thursday with three separate survival plans that include massive restructuring, the ditching of corporate jets and vows by CEOs to work for $1 a year.
But they could expect a chilly reception on Capitol Hill. Even a top Democrat in charge of evaluating their aid requests made it clear he was eager to avoid voting on a bailout. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, wrote to Federal Reserve Chairman Ben Bernanke on Wednesday asking the central bank chief whether there was anything stopping him from using his considerable lending authority to help the automakers.
And Senate Majority Leader Harry Reid, D-Nev., said it was up to the Bush administration to unilaterally rescue the Big Three with loans drawn from the $700 billion Wall Street rescue fund, since Congress was still unwilling to do so. "I just don't think we have the votes to do that now," he told The Associated Press.
Dodd's committee was hearing testimony on the companies' plans from GM CEO Rick Wagoner, Ford CEO Alan Mulally, Chrysler CEO Bob Nardelli, UAW president Ron Gettelfinger and the head of the Government Accountability Office. The House Financial Services Committee was to hold a similar session on Friday.
Automakers were trying to make the case that the billions in loans would be a bridge to survival and profitability.
In the streets outside the Capitol, all three companies were showcasing their futuristic, green models in hopes of counteracting their image as purveyors of gas-guzzling SUVs. Wagoner planned to drive to the hearing in a test version of the Chevrolet Volt, an extended-range electric vehicle expected to go on sale in 2010.
Reid and House Speaker Nancy Pelosi, D-Calif., said the hearings would help determine whether Congress would consider a massive aid package for the industry in a special session next week. Critics say the companies have been poorly managed and failed to show they won't be back for another government rescue.
The Big Three are struggling to stay afloat heading into 2009 during an economic recession, a steep decline in sales and a tight credit market. The three companies burned through nearly $18 billion in cash reserves during the last quarter.
Chrysler said it needed $7 billion by year's end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if economic conditions deteriorate. Both said in plans submitted to Congress that they could drag the entire industry down if they fail. Ford requested a $9 billion "standby line of credit" in case one of its Detroit competitors fails.
Wagoner and Mulally both say said they'll work for $1 a year -- a move Chrysler's Nardelli has already made -- if their firms accept government loans. All three plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.
In Detroit, the United Auto Workers union said it would delay the three companies' payments to a multibillion-dollar, union-run health care trust and essentially end a jobs bank program in which laid-off workers are paid most of their salaries. They also decided to let the Detroit leadership begin renegotiating elements of landmark contracts signed last year, a move that could lead to wage concessions.
The companies, union officials and car dealers were lobbying feverishly for the loans, arguing that the collapse of one or more of the Detroit carmakers would throttle the already weakened U.S. economy and jeopardize the nation's manufacturing sector.
Yet the bailout remains unpopular with the public. Sixty-one percent oppose providing the auto companies with billions in federal assistance, according to a CNN-Opinion Research Corp. poll released on Wednesday. Fifty-three percent said it would not help the country's economy.
The auto executives were roundly criticized for taking corporate jets to the hearings last month and this time made the 520-mile trip to Washington aboard hybrid cars. Underscoring the different approach, Wagoner and GM officials ate lunch Wednesday at Quiznos at a Pennsylvania rest stop along the way.
Showing posts with label jobs bank uaw. Show all posts
Showing posts with label jobs bank uaw. Show all posts
Thursday, December 4, 2008
Wednesday, December 3, 2008
UAW to renegotiate labor terms, suspend jobs bank
The United Auto Workers said Wednesday it is willing to change its contracts with U.S. automakers and accept delayed payments of billions of dollars to a union-run health care trust to do its part to help the struggling companies secure $34 billion in government loans.
United Auto Workers President Ron Gettelfinger said the union will suspend the jobs bank, in which laid-off workers are paid up to 95 percent of their salaries while not working, but he did not give specifics or a timetable of when the program will end.
"We're going to sit down and work out the mechanics," Gettelfinger said at a news conference after meeting with local union officials. "We're a little unclear on some of the issues."
Members of Congress criticized the automakers last month for paying workers who are not on the job. About 3,500 auto workers across the three companies are currently in jobs bank programs.
One local union member who was in the meeting said the changes to the jobs bank would nearly eliminate the program. The member asked not to be identified because the details had not been made public.
Gettelfinger stopped short of saying the union would reopen contract talks with General Motors Corp., Chrysler LLC and Ford Motor Co. but said it would be willing to return to the bargaining table to change some terms.
Talks with GM will begin immediately, but additional bargaining officials must be elected for Ford and Chrysler, Gettelfinger said, and any modifications would still have to be ratified by local union members.
He also said the union will run a television ad in Maine, Kentucky, Indiana and Minnesota to put the faces of union workers on the controversy over the loans, and explain how the auto industry differs from the banking industry. The ads presumably are designed to pressure Congressional opponents of the loans.
"There's a perception problem," Gettelfinger said, stressing that the automakers' woes have painted a negative view of the union. "Yes, we have lost some clout."
Delaying the health care trust payments will help the companies survive their cash shortages, which they say were brought on by the severe economic downturn and the worst U.S. sales climate in more than a quarter century.
GM had been scheduled to pay more than $7.5 billion early next year to the union-administered fund which will take over retiree health care payments on Jan. 1, 2010. Ford owes $6.3 billion to its trust fund at the end of this year. Chrysler figures were unavailable.
The delay will have to be approved by federal courts, which already have blessed the trusts' formation.
All three companies agreed to fund the trusts, called voluntary employee beneficiary associations or VEBAs, as part of the landmark 2007 contract reached with the UAW. By doing so they move billions in liabilities off their books.
When they go into effect, the trusts will pay health care bills for about 800,000 UAW retirees, spouses and dependents at the three companies. GM expects to save about $3 billion a year when the expenses are moved, while Ford says it will save $1 billion.
The CEOs of all three automakers are heading to Washington for more hearings Thursday and Friday on their loan requests after an abysmal showing before lawmakers last month. Gettelfinger will also attend.
Congressional leaders demanded business plans from all three that include a reduction in labor costs so Detroit is more competitive with foreign automakers with U.S. factories. The companies submitted their plans to Congress on Tuesday.
"I don't think Congress is out for blood," Gettelfinger said of the criticism the union received during his previous testimony last month. "There will be more pressure on us to do this. We're going to step up and do it."
That sentiment was echoed by several union representatives at the news conference.
"Everybody has to give a little bit," said Rich Bennett, an official for Local 122 in Twinsburg, Ohio, representing Chrysler workers. "We've made concessions. We really feel we're doing our part."
But a retired GM worker said the union might be acting hastily out of fear that one of the automakers could shut down.
"Fear is a bad basis on which to make decisions," said Frank Hammer, of Local 909 in Warren, Mich. "I think they're making another mistake."
Members at Local 122 are fearful of losing their jobs, said Bennett's associate, Ken Walters. They're seeing nearby plants shut down on regular basis.
General Holliefield, the UAW vice president representing Chrysler workers, said union members "historically do the right thing" in terms of making concessions during tough times, although the moves outlined Wednesday came to fruition following last month's congressional thrashing.
"Washington didn't ask us for concessions," he said. "It wasn't anything we were thinking about."
The president of Chrysler said the UAW's willingness to change the union's contract is a good step.
Chrysler LLC President Tom LaSorda said during a Toledo rally for the industry on Wednesday that both sides need to go back and review the entire framework of the contract. He said if the union would surrender job security protections it would help the Detroit Three in the long run.
United Auto Workers President Ron Gettelfinger said the union will suspend the jobs bank, in which laid-off workers are paid up to 95 percent of their salaries while not working, but he did not give specifics or a timetable of when the program will end.
"We're going to sit down and work out the mechanics," Gettelfinger said at a news conference after meeting with local union officials. "We're a little unclear on some of the issues."
Members of Congress criticized the automakers last month for paying workers who are not on the job. About 3,500 auto workers across the three companies are currently in jobs bank programs.
One local union member who was in the meeting said the changes to the jobs bank would nearly eliminate the program. The member asked not to be identified because the details had not been made public.
Gettelfinger stopped short of saying the union would reopen contract talks with General Motors Corp., Chrysler LLC and Ford Motor Co. but said it would be willing to return to the bargaining table to change some terms.
Talks with GM will begin immediately, but additional bargaining officials must be elected for Ford and Chrysler, Gettelfinger said, and any modifications would still have to be ratified by local union members.
He also said the union will run a television ad in Maine, Kentucky, Indiana and Minnesota to put the faces of union workers on the controversy over the loans, and explain how the auto industry differs from the banking industry. The ads presumably are designed to pressure Congressional opponents of the loans.
"There's a perception problem," Gettelfinger said, stressing that the automakers' woes have painted a negative view of the union. "Yes, we have lost some clout."
Delaying the health care trust payments will help the companies survive their cash shortages, which they say were brought on by the severe economic downturn and the worst U.S. sales climate in more than a quarter century.
GM had been scheduled to pay more than $7.5 billion early next year to the union-administered fund which will take over retiree health care payments on Jan. 1, 2010. Ford owes $6.3 billion to its trust fund at the end of this year. Chrysler figures were unavailable.
The delay will have to be approved by federal courts, which already have blessed the trusts' formation.
All three companies agreed to fund the trusts, called voluntary employee beneficiary associations or VEBAs, as part of the landmark 2007 contract reached with the UAW. By doing so they move billions in liabilities off their books.
When they go into effect, the trusts will pay health care bills for about 800,000 UAW retirees, spouses and dependents at the three companies. GM expects to save about $3 billion a year when the expenses are moved, while Ford says it will save $1 billion.
The CEOs of all three automakers are heading to Washington for more hearings Thursday and Friday on their loan requests after an abysmal showing before lawmakers last month. Gettelfinger will also attend.
Congressional leaders demanded business plans from all three that include a reduction in labor costs so Detroit is more competitive with foreign automakers with U.S. factories. The companies submitted their plans to Congress on Tuesday.
"I don't think Congress is out for blood," Gettelfinger said of the criticism the union received during his previous testimony last month. "There will be more pressure on us to do this. We're going to step up and do it."
That sentiment was echoed by several union representatives at the news conference.
"Everybody has to give a little bit," said Rich Bennett, an official for Local 122 in Twinsburg, Ohio, representing Chrysler workers. "We've made concessions. We really feel we're doing our part."
But a retired GM worker said the union might be acting hastily out of fear that one of the automakers could shut down.
"Fear is a bad basis on which to make decisions," said Frank Hammer, of Local 909 in Warren, Mich. "I think they're making another mistake."
Members at Local 122 are fearful of losing their jobs, said Bennett's associate, Ken Walters. They're seeing nearby plants shut down on regular basis.
General Holliefield, the UAW vice president representing Chrysler workers, said union members "historically do the right thing" in terms of making concessions during tough times, although the moves outlined Wednesday came to fruition following last month's congressional thrashing.
"Washington didn't ask us for concessions," he said. "It wasn't anything we were thinking about."
The president of Chrysler said the UAW's willingness to change the union's contract is a good step.
Chrysler LLC President Tom LaSorda said during a Toledo rally for the industry on Wednesday that both sides need to go back and review the entire framework of the contract. He said if the union would surrender job security protections it would help the Detroit Three in the long run.
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